The
U.S. Treasury has frozen interest rates on savings bonds. As of May 1,
Series EE bonds have a fixed rate, the one that prevails at the time of
their purchase. Gone is the safety net of floating rates that rise with
inflation, and those people who will be most affected will find their
savings bonds yielding less in purchasing power when they cash them in.

I learned about
savings bonds from my mother. In her mind, they were one of the two safe
ways to put away a few dollars, the other being the cracked sugar bowl on
the top shelf of the cupboard, which she said was "right where I can watch
it." Statistics are periodically released that show that average Americans
don't save anymore, but in fact, the feds and the financial institutions
reinforce poor saving habits by not encouraging and requiring that we set
aside funds for our big purchases, like our homes and vehicles. Instead
they pander to our weaknesses and need for instant gratification and suck
the resources from the working class.

The history of
Series E savings bonds, which were replaced with the EEs in 1980, is
offered at the Web site dedicated to them:
www.savingsbonds.com. They "were originally issued in 1935 to provide
a secure and attractive instrument for investors of modest means and an
additional source of funds for the Treasury." Savings bonds were offered
to fund World War I, when they were called Liberty Bonds, and other wars,
as far back as the Revolutionary War in 1775. The Web site is now
literally the only marketing tool used to sell them. In 2003 all 41
offices dedicated to selling bonds to the public were shut down, although
they continue to be available from banks and on-line. The marketing budget
of some $22 million was reduced to $0, and the redemption period was
extended from six months to a year, making them less desirable to a family
that might need to cash in for an emergency.

Saving
is such an archaic term. Now we invest, but in instruments that are
purchased through brokerage houses, and which earn them a fee. But working
people who don't buy stocks or shares of mutual funds need a no-cost way
to save that is understandable, easy and habit-forming, and one that
requires a minimum investment. How else can they accumulate enough to meet
emergencies like job losses or medical bills. The interest on savings
bonds goes untaxed until redemption, and bonds can be used to fund
education tax-free. Our savings rate is currently the lowest in history,
and the majority of families in the United States don't have the
recommended six-month cushion to lessen the blow of a crisis. Low-income
earners now too often rely on paycheck advances and credit cards to pay
their bills, and if their credit score slips low enough, they are unable
to open traditional bank accounts. They also tend to put off opening
savings accounts because of required minimums and fees, usually higher
than the lowest-cost EE bond at $50. And a drive through any poor
neighborhood will reveal that few bank branches are even located where
low-income families live.

Besides the economic
impact of saving, there is a psychological impact. Can you remember, as a
child, watching your piggy bank fill, or the balance of your bank account
grow with the dollars you put in toward a new bicycle? Many adults today
don't know that feeling. The lack of support for savings bonds and the
newly announced freeze on interest rates aren't just evil, they're
immoral. The government has taken this action because rising inflation is
almost a certainty, and the intent is to save money on the backs of low-
to moderate-income families who are destined to suffer even more as the
economy struggles.

In the past, savings
bonds were associated with patriotism, as well as being an investment of
and in the working class. At one point, inexpensive savings stamps were
purchased and pasted into books that could be redeemed for bonds, and the
government encouraged thrift even in peacetime. In 1944 then Treasury
Secretary Morgenthau saw savings bonds as a way to "democratize public
finance in the United States. We in the Treasury wanted to give every
American a direct personal stake in the maintenance of sound Federal
Finance. Every man and woman who owned a Government Bond, we believed,
would serve as a bulwark against the constant threats to Uncle Sam's
pocketbook from pressure blocs and special-interest groups. In short, we
wanted the ownership of America to be in the hands of the American
people."